Tiffany Gota and Christina Drobisch

Feasibility Study
NUTN 513
September 14, 2014
Feasibility Study Outline - Creekside Caf at Three Rivers Medical Center

Executive Summary
Asante Three Rivers Medical Center is located in Grants Pass, OR. Within the
hospital Nutrition Services manages three retail foodservice businesses. They run
the main cafeteria, an espresso bar, and a caf stationed in the new Center for
Outpatient health.
Background Information
The need for a feasibility study was discovered when an error in the Wild Rogue
Espresso Bar become apparent. Items made for the main cafeteria were being sold
through the Espresso bar, falsely elevating their revenue. This error also inflated the
productivity for the Espresso bar, showing that they could ultimately function with
less FTEs. The budget for the cafeteria showed a loss of revenue and decreasing
productivity.
Due to the Creekside caf being a new foodservice location in the hospital, the
projections for the budget, revenue, FTEs and productivity have to be estimated.
The Creekside Caf opened on August 6th, and although the building is open, all
services will not be functioning until the middle of October. During the first month
the caf will be running at 30% productivity and once the facility is fully functioning
the projected productivity is expected to increase by 20%.
Items are made and marked for the Creekside caf so that revenue and cost of
production can be as accurately recorded. Given the cost of menu items, the total
revenue since the caf has been open (4 weeks) and production sheets we were
asked to estimate how many FTE the Creekside Caf would need to run efficiently,
generate a profit and run at 100% productivity. After looking through the data given
we decided to explore if it is feasible for the new Creekside Caf to use 2.5 FTE while
maintaining 100% productivity and turning a profit.
The Three Rivers Medical Center runs on department productivity. In the nutrition
foodservice department, productivity is driven by the equation listed below
# Of Meals Served (Volume)

Hour Stat. + Variable hours

______________________________
# Of Meals Actually Worked

= % Productivity

Where one meal equals $4.33 (factor) and the hour stat equals production
hour/volume. If the productivity is to low or below 100%, they need to lower hours,
if the productivity is too high or above 100%, the department needs to increase
hours.
The Proposal
The stakeholders in this feasibility study are the foodservice manager, Lisa Morales
and her foodservice employees. If the Creekside caf generates a profit the money
will be going back into the facility and benefit the hospital.
The budget that Lisa created for the 2015 fiscal year was based on utilizing 2.5 FTE
to run the business.
To figure out if 2.5 FTE is feasible for Creekside, a productivity equation must first
be calculated. This equation is total sales multiplied by an hour statistic. We used
total sales for the year to calculate productivity.
First month total sales (8/6/14 through 9/4/14): $7405
We projected a 20% increase in sales once the building is fully open:

$7405 x 1.2 = $8886

$7405 + $8886 = $16291/ month projected sales
$16291 x 12 =$195492/ year projected sales

$195492 / 4.33 = 45148 meal volume

Meal volume is then divided by the number of pay periods in a year:
45148 / 26 = 1736 volume per pay period

The hour statistic number is productive hours divided by volume.

2.5 FTE is equal to 200 productive working hours
2.0 FTE is equal to 160 productive working hours
2.5 FTE: 200 / 1736 = 0.12 hr/stat
2.0 FTE: 160 / 1736 = 0.92 hr/stat

Productivity equation: productive hours / (volume x hr/stat)

2.5 FTE: 200 / (1736 x 0.12) = 96%
2.0FTE: 160 / (1736 x 0.92) = 100%
Based on the estimated sales of $195,492, it is feasible to run the caf on 2.0 FTE as
opposed to the original 2.5 FTE.
We propose that the Creekside caf can, more efficiently run using 2 FTE to turn a
profit.
The 2015 budget was projected with 2.5 FTE in mind. Due to the higher productivity
of 2.0 FTE, the budget was adjusted accordingly.
0.5 FTE = $15,703
$198,492 - $15,703 = $812,310/year
Based on the projected 2015 budget, with 2.0 FTE, $723 in daily sales is needed for
the caf to break even.
To calculate percent profit, total sales is divided by total budget, (Figure #3).
2.5 FTE: $195492 / 198031 = 98.7 or a 1.3% loss
2.0 FTE: $195492 / $182310 = 1.07 or a 7% profit

Timeline
See Attached Gantt Chart
Conclusion
Due to the lack of customer traffic through the building, success of the business can
only be projected. Productivity calculations proved that the Creekside caf could
benefit and run more efficiently using 2 FTE. If the business were to run on 2.5 FTE,
they would come in over budget for the year and fail to turn a profit. By running at
2.0 FTE, we can project the caf to turn a 7% profit.